You have to enter your 1099-Q in TurboTax. As you do not have education expenses, TurboTax will automatically tax the earnings and calculate the penalty of 10% and include them in your tax return.
In TurboTax, you can
enter your form 1099-Q by following these steps:
- In TurboTax, open your tax
return
- Click on Federal in the left-hand column, then
on Deductions & Credits on top of the screen
- Scroll down to All Tax
breaks, locate
the section Education and click on Show more
- Click Start next to ESA and 529 qualified tuition programs (form 1099-Q) (see attached screenshot).
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